Gustavo Ballvé on July 15th, 2011
Food for thought, Home, Mental models, Portfolio Management, Risk management, Signal or Noise

Interesting story on Bloomberg describing the rise in importance (and level of compensation) of the risk officers in banks, hedge funds and so on. Business Insider took that story to its limit and created a “rock star” profile of many prominent Chief Risk Officers. The question is: are financial institutions safer for it? What “risks” are being “measured”, and how? When even Basel III is being called into question (“the capital charge is wrong”, “it adds volatility”, “to VaR or not to VaR?” etc.) and financial-sector regulation is still open for debate in the US and abroad, what exactly is being achieved?

We have delved on the subject before (links inside), and still believe that most of all “risk comes from not knowing what you’re doing”.

One of our first posts ever on Buysiders, back in April 2009, was on risk management.

A more recent post on Taleb’s new article also quoted the article’s co-author, Mark Blyth, and had a video with him on the dangers of over-relying on mathematical models.

Buffett’s classic 1998 speech has brilliant moments, many of them regarding Risk.

Another often-overlooked aspect of “risk”: processes or, as this post calls it, “minding the shop”.

‘Black-swan proof’? and the second part of this post regards the quest to hedge against “tail risk” or “black swans”. Beware the fads in Risk Management.

The TSA says “we’ll never eliminate risk”, and he’s talking about terrorism in the US’ transportation systems. Along came the nuclear disaster in Japan and this post analyzes risk in the nuclear “world”. Both very complex systems – is Global Finance any simpler?

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